How to Refinance to Prevent Foreclosure

Video Transcript

"The average person in this country is looking at a property value that may be declining. They also, at the same time, are dealing with the possibility that one of the two people that works in that household, the husband and the wife, may be out of a job and so it's say double whammy, and so the idea of resetting that loan on that home can come in two fashions. Number one, going back to the bank and saying, I want a new loan. Which in many cases the very event that causes the problem precludes you from doing it, and so you don't get a new loan, you don't refinance that loan, you modify that loan. And a large number of cases, people have loans that are probably as much or more than the value of the property, and so you go walk, no bank's going to give me a loan. Well, there's, that's not necessarily true. If you still are working and you got a loan, and it's due to reset, okay, or there's going to be a payment jump in any year or two and you know that's coming. You can go ahead and refinance that up to 105% of the value of the property with this new Fannie Mae-Freddie Mac plan. You can go to financialstability.gov and you can read all about it. So, there's two options. You can refinance and they'll help you out on that or you can do a loan modification and that's just what the term implies. You're not getting a new loan, you're not getting rid of the old loan, you're modifying the existing loan with the existing lender. Now, most people would be ill-advised to try to represent themselves at a divorce hearing. They would also be ill-advised to try to deal with the Loss Mitigation Department at Sun Trust Bank or Bank of America because those guys are not on your side, they're on their side. We recommend that you attain, retain the services of a competent legal firm to represent you in these dealings. If you don't think that's a good idea and you want to do it yourself, knock yourself out and after you get done you can call Loan Assistance of America, they are from we're affiliated with, they do a terrific job and you'll find that you can save somewhere between 40 or $50,000 over the next five years by resetting that interest rate. We see numbers of examples where the interest rates are being lowered to 2 1/2, 3 percent. We got, you can even go down as low as 2 percent for five years on the interest rate on an existing loan to get people a chance to get back on their feet. Now, don't take it from me. Go to financialstability.gov and read what the government is saying can be done and what banks should be doing to modify these loans. So, two things happen. Number one, they get the old toxic asset off the books. You're literally modifying that loan, you're saying it's no longer an adjustable rate mortgage, it's no longer going to blow up in a year or two, okay? We're going to have a 3 percent interest rate for the next five years then it's going to go to 4 percent for a year than five and then it's going to stop at 6 percent but we just modified that toxic asset loan, we got that off the books so the bank is happy, okay? They don't want the house in most cases anyway. They got enough of 'em, okay? And number two, you keep the borrower in the home. Everybody wins 'cos when foreclosure is happenin' in neighborhoods, that tends to pull down the property values. It's like when something, somebody pulls that table cloth and all the dishes start to fall off the edge, well, one house, two houses, three houses or bank on foreclosures that pulls the property values of the rest of the neighborhood down. Nobody wants in a foreclosure situation."